oil prices - All posts tagged oil prices

It was looking to be promising day for U.S. stocks. Futures were rising in pre-market action, buoyed by strong European markets and earnings from the likes of Halliburton (HAL).

But a rise in futures is not a guarantee that stock indices won’t turn on a dime. Less than an hour the opening bell, the major stock benchmarks fell , dragged lower by falling oil prices.

The Dow Jones Industrial Average dropped 69 points, or 0.4%, to 17,442.62. The S&P 500 lost 4.3 points, or 0.2%, to 2,014.79, and the Nasdaq Composite Index declined 7.7 points, or 0.23%, to 4,623.9.

Crude-oil futures slumped 4.8% to $46.34 a barrel, pressuring energy stocks, which fell the most on the S&P 500%. Among shares of oil and gas producers, Denbury Resources (DNR) fell 5.1% and Range Resources (RRC) fell 4.8%, and oil field service giant Halliburton and Baker Hughes (BHI) each dropped more than 2%.

On Friday, the U.S. benchmark oil contract ended the day up $2.44, or 5.3%, at $48.69 a barrel, helping futures rise 0.7% for the week, ending seven consecutive weeks of losses. Shares of energy companies rose, leading the index higher. The Energy Select Sector SPDR Fund (XLE) gained roughly 3% today.

The surprise move by Switzerland’s central bank hit foreign-exchange trading firms. Shares of FXCM (FXCM) fell almost 90% pre-market before they were halted. The biggest retail foreign-exchange broker in the U.S. and Asia said in a statement that the unprecedented volatility in the euro against the Swiss franc triggered losses that left it with a negative equity balance of about $225 million. The firm inked a $300 million deal with Leucadia National (LUK), parent of investment bank Jefferies, to provide the funds to allow FXCM to meet its regulatory obligations and continue operations.

Schlumberger (SLB) late Thursday posted fourth-quarter adjusted earnings of $1.50 a share, ahead of forecasts, and announced it will raise its dividend by 25%. It also disclosed a $296 million charge for 9,000 job cuts. The stock rose 6.3% today.

The Dow and the S&P 500 remain in track to deliver yet another year of gains, giving investors good reason to pop a cork during tonight’s New Year’s Eve celebrations.

No one is raising a glass to energy stocks. Thanks to the route in oil prices, which continued today, the Energy Select Sector SPDR ETF (XLE) fell almost 0.8% to $79.14 in Wednesday market action and is poised to end 2014 sitting 9% below where it started the year.

The selloff in crude oil that started in midsummer has erased roughly half of the commodity’s value amid growing concerns of global oversupply and lackluster demand. Oil prices are set for their biggest annual loss since the recession in 2008.

As Edward Jones analyst Brian Youngberg wrote in a recent note:

We expect near-term oil prices to remain volatile and nearly impossible to predict. We see the potential for further downside in coming weeks and months. However, prices could also rebound quickly if data or sentiment changes.

And American Eagle Energy (AMZG) fell 21% after it suspended its drilling operations and likely won’t resume until oil prices improve. The small producer is the latest victim of the plunge in crude prices.

And then there is Harold Hamm. The Oklahoma oilman and CEO of Continental Resources (CLR) was ordered by a judge in November to pay his ex-wife nearly $1 billion to settle a two-and-a-half – year divorce battle. At first, he described the settlement as fair. But since then, Continental’s market value has fallen by almost one-third, so Hamm, whose fortune is tied up in the oil company, is appealing the ruling.

Hamm owns roughly 70% of Continental. The company is the largest oil producer in North Dakota, home to the Bakken Shale, which experienced a drilling boom led by Continental.

Hamm’s ex-wife, meanwhile, has appealed the settlement as too small

As the WSJ reports:

Mr. Hamm argued in his appeal, filed 10 days after Ms. Arnall’s appeal, that the recent and plunge in oil prices shows just how much the company’s success is tied to market forces beyond his control. “The dramatic drop in oil price post-trial and the corresponding drop in the CLR stock price demonstrate the overriding impact of the oil price on the value of the stock,” the appeal says.

It’s a bad day for energy companies. And Southwestern Energy (SWN) is no exception.

The oil and gas exploration company dropped 6.1% to $27.43 in recent trading, making it one of the worst performers on the S&P 500 index.

What happened? The company announced plans to increase its planned capital spending to $2.6 billion in 2015. That contrasts with several announcements in recent weeks from energy companies that are reducing spending as oil prices fall.

Southwestern is targeting a production increase of about 28%. A week ago, the company bought certain assets in West Virginia and Pennsylvania from Chesapeake Energy (CHK) for $4.98 billion and announced plans to buy some assets from Statoil (STO).

Sterne Agee analyst Tim Rezvan recently trimmed his earnings estimates, but maintained a Buy rating on the stock, arguing that Southwestern “remains one of the most immune coverage companies to the broad sell-off in crude, given its gassy skew.” Natural gas accounts for 93% of projected production next year. As he writes:

The lack of exposure to oil should support continued mid-teens production growth CAGR through ’17, evident in bullish growth guidance provided last night. While a ~$2 billion equity component to fund the Appalachia expansion may be a near-term headwind, it should allow the company to maintain investment grade debt. We estimate net debt/TTM EBITDA of only 1.6x at y/e 2015, assuming $2 billion of equity financing.

The firm said it expects 2015 revenues between $540 million and $600 million, well below the $815 million analysts were expecting. Its first quarter revenue guidance, a range of $160 million to $175 million, also came in far short of expectations of $228 million.

The company blamed a slowdown in oil sands projects in Canada amid an environment of low oil prices for the shortfall, while also noting that low coal prices in Australia are also hurting sales.

Civeo’s near-term strategy of suspending its dividend and paying down debt is prudent and will enable the company to remain compliant with its debt covenants. Management expects 2015 capital spending of $75-85 million versus $260-280 million in 2014, including $55-60 million of maintenance. With about $250 million in cash on its balance sheet and our expectation the company is cash flow positive in 2015 even with depressed expectations, the company should be able to lower its debt levels to $450-500 million.

Civeo’s share price was already under severe pressure before the profit warning. The shares hit a previous 52-week low of $6.81 on Dec. 17, a fall of more than 75% since it hit a high in June following its spinoff from Oil States International (OIS).

Oil prices rose off multi-year lows Friday, but were still on track for a seventh consecutive week of losses.

Light, sweet oil for December delivery rose $1.74, or 1.7%, to $75.94 a barrel on the New York Mercantile Exchange. Prices dropped below $75 a barrel Thursday for the first time in more than four years.

Brent crude for January delivery rose $2.09, or 2.7%, to $79.58.

A big concern facing the oil market has been OPEC, namelyworriesthat the cartel hasn’t yet signaled if it would cut output when its members meet in two weeks in Vienna.

Stocks barely budged on Monday, with the Nasdaq Composite unable to maintain gains that briefly sent the index over 4,000 for the first time in 13 years.

The Dow Jones Industrial Average rose 7.9 points or 0.05% to end at 16,072.67, marking its 42nd record close this year. The Nasdaq Composite, meanwhile, added 2.924 points or 0.07% to end at 3,994.573.

But the S&P 500 lost 2.24 points or 0.12% to close at 1,802.52.

A surprise deal over the weekend to curb Iran’s nuclear program in exchange for looser economic sanctions had boosted sentiment during a holiday trading week expected to generate few other headlines.

News of the deal sent oil prices falling. The weekend deal makes it easier for Iran to export some of its crude oil to international markets, and January crude-oil futures slid 0.7% to $94.13 a barrel.

The price drop help bolster some airline stocks Delta Air Lines (DAL) climbed, touching an all-time high early in the session, before closing at $29.17, a 2% gain over Friday.

Some pundits argue that lower oil prices will help boost spending as we enter the holiday shopping season’s Black Friday.

The yield on the 10-year Treasury note inched lower to 2.738% from 2.754% late Friday. December gold futures rose, reversing an early loss.

On Friday, the Dow rose 55 points, or 0.3%, to a sixth record close in eight sessions. The Dow also posted a seventh-straight weekly gain, the longest such stretch since January 2011.

On Friday, the S&P 500 closed above 1800 for the first time, posting its 37th record high close of the year.

The Federal Reserve’s easy-money policy, low inflation, a slow-but-steady economic expansion and a shrinking number of attractive alternatives have helped fuel the stock market’s push into record territory in recent months.

But next year, a stock market rise will depend on healthy corporate profit growth, says Deutsche Bank strategist David Bianco. He wrote:

Despite the Scrooge like intro, we find ourselves in a very cheery early holiday mood. 1800 certainly deserves celebration. Whether 2013 ends with the S&P +/- 50 points from here matters little. This year will be remembered for strong gains, investors putting the crisis behind and restoring the normal S&P PE. This is a welcome sign of better confidence and equity wealth helps, but before we get too merry we turn to the simple truth that now good growth better come. An accommodative Fed, buybacks, inflows, not expensive PE (despite Shiller’s PE) will all assist the market in 2014, but healthy EPS growth is now a must.

In corporate news, J.C. Penney (JCP) rose 3.6% to $9.19 despite news late Friday that S&P Dow Jones Indices would strike the retailer’s stock from the benchmark S&P 500 Index and move it to the S&P MidCap 400.

Dialysis provider DaVita Healthcare Partners (DVA) soared almost 8.9% to close at $61.55 after the market learned that Medicare funding cuts would come in lower than expected. Rival Fresenius Medical Care (FMS) rose 7.2% on the same news.

WalMart Stores (WMT) rose 0.8% to $80.43 after the discount retailer said company veteran Doug McMillon would replace Mike Duke as CEO.

This morning’s nonfarm payrolls report showed continued (albeit muted) job growth and a decline in the unemployment rate. The news lifted stocks for much of the day, although they gave back most of their gains in the last two hours of trading. Oil also fell hard at the end of the day, ending with deeper losses than equities. Supply appears to be outpacing demand, which fell 0.3% in the four weeks ending Sept. 28, the Energy Information Administration said this week.

The big integrated oil companies, however, have taken the decline in stride. Exxon Mobil (XOM), ConocoPhillips (COP) and Chevron (CVX) all posted mild gains for the week, and they are all up more than 4% in the past month, outpacing the S&P 500.

Oil traders responded to the largest drop in the commodity’s price all year on Wednesday by hitting the Buy button hard, sparking the commodity’s biggest rally in two months.

Nymex-traded crude futures rose 4.1% to $91.71 per barrel, the largest gain since August 3. The rally does not appear to have been sparked by any specific news — jobless claims and news out of Europe were incrementally positive, with ECB President Mario Draghi saying that the ECB is ready to buy bonds as soon as it is asked. Traders likely saw crude as a relative “bargain” after its recent drop.

About Stocks To Watch

Earnings reports, corporate strategies and analyst insights are all part of what moves stocks, and they’re all covered by the Stocks to Watch blog. We also look at macro issues, investor sentiments and hidden trends that are affecting the market. Stocks to Watch gives you the full picture of the U.S. stock markets, all day long.

The blog is written by Ben Levisohn, a former stock trader who has covered financial markets for the Wall Street Journal, Bloomberg and BusinessWeek.